Scuttling the Economic Ship
Houston, Texas Lawyer
The, once upon a short- time ago, bailout is now a rescue. Is the bailout really a sellout?
A skilled card player can usually expect to beat the odds with unskilled players in the game called “high/ low”. Instead of the five highest hands winning the entire pot, the pot is split in half. The rules are that the highest hand and the lowest hand both win. They split the pot. If there are seven card players that means that two win half as much, instead of one winning everything. So why does the pro win nearly 100% a time? The odds shouldn’t be that much different. There are two balls, the best hand and the worst hand…but amateurs just can’t take their eyes of the highball. And they ignore the low ball.
The secret? Assume seven players - five or six of the seven players will go only for the high hand and will fold if they have no low cards and can’t envision winning the high hand. They just can’t see the downside and they are looking for pairs like Aces and such. The pro looks for the worst hand. When the dealing is done he picks up his half most of the time while everyone is patting the “high hand” winner on the back. The house, of course, almost always wins, even beating the pros. The house owns the table, the rules, the chairs and the chips…and often supplies the players with alcohol.
The stock market isn’t much different.
The best game in the house is often won by the people betting on low…the bettors who go short.
Of course the house beats everyone. A man for example, like Secretary Paulson is not going to lose to the high hands or the low hands. King Bush recently suspended shorting the market, ( that means betting stocks will go down) closing that table and shutting those players down. His reason? These people, these capitalists are very selfish. But isn’t capitalism about choice? About freedom?
All that is left are the drunk high hand players. They are the ones who part with their money the easiest.
What would happen tomorrow if you drove your car down the road and waited for the street people on the corner (25% of them are disabled Vietnam vets with Post Traumatic Stress Disorder)? The first one has his dirty hand out, teeth broken, and a sign saying: “Help a Vet,” which he just put down on the side walk to approach you. Sometimes you hand the guy a buck, sometimes you leave the window up. Sometimes you wonder if he really is a vet…and sometimes he’s not. This time though you say to him, “Sign this promissory note agreeing to pay 35% interest with lots of punishment if you are late.” He gives you a strange look. Are you giving him paper? Are you the police? Are you some kind of nut? Finally he understands - if he signs the paper you will hand him some money. The paper says you are handing him $10,000 but you are only handing him $9000. You call the thousand dollars “points.” He’d sign the paper promising to pay someone $10,000 even if you only gave him a couple of bucks.
Of course you might give the man some cash; but there is no business reason why you would make this deal unless you were a crook and thought you could sell the note to someone else.
Goldman Sachs sold these notes by the gazillions to the American public and the Chinese and anyone else they could find with a buck to burn…and those guys want to sell it to you. Today, no one is buying any more and King Bush and Prince Paulson, the former CEO of Goldman Sachs, are looking for a new buyer. They are so desperate they would discount the note from the $10,000 face value. Maybe a lot. Maybe to you.
Make no mistake about it. The market is in trouble. King Bush’s cries for help are not all cries for “Wolf,” not all lies about the weapons of mass destruction, in a nation that had no ability to harm us. Not cries of Wolf, as Bush tied up the airports and seized toothpaste from kids and old folks to save Democracy…destroying much of it at the same time, screaming out colors like “code orange” that were never explained. The last ones holding this trash for cash paper were in serious trouble if they couldn’t unload it; and the banks had to look their creditors and shareholders in the face, theoretically explaining how all the money we had put into their custody just wasn’t there anymore. That’s right. All this money we entrusted to Bankers. They say it’s gone… and they say we have to replace it. They opened the teller windows and handed it out to the street people. Maybe Washington wouldn’t take care of these starving crazed vets…but the Fed would. Just not all of them. I hate to see anyone living outside, but the simple truth is that there is not enough wealth in this country or Europe, for us to hand every person who doesn’t have a home a free one. Maybe two or three of them could shack up together?
A funny thing happened on the way to the bank. The depositors got nervous. The officers bailed out and many like investment guru Paulson headed for Washington (Paulson with $500 Million bucks).
So who is gonna fix this?
Not I, said fifty million citizens.
Not I, said a dozen congressmen.
So they went to the Senate and they got ¾ to agree to fix it.
And they have offered bribes to the 12 apostles of both parties, Democrats and Republicans who said, “No,” not quite as loudly as their cohorts. We will sign huge tax breaks, they told the Republicans. We will help the retarded, and the Vietnam vets on the streets, they told the Democrats. But that alone won’t do it. Someone will be bribed with a lobbyist job, or a job with the pharmaceutical industries or the war industry.
The reason the vote was not close in the Senate is that they don’t run for re-election every two years. Two thirds live to rule another day no matter how the votes go.
One reason the vote was so close in the House is that they all run every two years … and unless someone is motivated only by patriotism…survival forces them to look to self interests.
The truth is that this “bailout” won’t do the job. It won’t make worthless paper valuable, and it won’t turn lead into gold.
With or without this bill the economy is in trouble and either today or tomorrow there will be a reckoning. Someone will have to pay. Will it be the Arabs, the Chinese, the American shareholders, or our Grandchildren? Who gets bailed out and who gets sold out?
The solutions are in propping up the dollar, not selling it down the Mao Tse-tung river. Stop buying Chinese trash at Wal-Mart and force them to pay import taxes to enter our country… especially since they place so many tariff burdens on us, preventing us from selling goods in China. Stop buying Arab and Venezuelan Oil. Get off the grid.
But these messages mean we can’t have as much stuff anymore…unless we pay cash. We can’t have all that cheap credit anymore, unless we can pay it back. If we bought a stock that is propped up like Enron, we lose. If we try to bluff with an empty hand, we lose.
The United States use to sell to everyone else and they borrowed to pay us. Now our largest export is debt. The world is losing trust in our ability to pay the debt…precisely because we can’t pay it. The proposed solution: Borrow More To Pay that Debt? It’s like telling the crew of a sinking ship they don’t have to bail the water out to keep afloat; instead they will keep floating a new way…they will add water to the boat.
Tomorrow the full force of the powers that run the house, and make the rules will be against those twelve people who said, “No” to more water. A few of the water-bailers will be thrown overboard. A few will convert. A couple will be offered their own life boats…free of charge of course, without any water on board. And it is more likely than not the tax payers will lose tomorrow and the huge $700 billion dollar bill will pass… and our ship will continue to sink.
Michael Minns is a lawyer and a former boxing champion who defends citizens from the IRS, sues crooked lawyers, and wrote the best selling books "The Underground Lawyer" (available on Amazon.com) and "How to Survive The IRS: MY Battles Against Goliath".
have been published by the New York Times, Fortune Magazine, People
Magazine, and his face has appeared on the Good Morning America Show,
Hardball, and many others; but when he decided to write about this
current financial disaster, he chose the US~Observer. His victories
include the largest tax refund case in US history, the first and second
disbarment of IRS lawyers for misconduct in US history, and the largest
number of off shore acquittals in a single case in US history. The
largest legal malpractice judgment against a divorce lawyer in US
History, and the only “not guilty” verdicts in the famous
series of “Harboring” cases and murder charges in the
Gordon Kahl Arkansas trials. Quite a “partial resume.”
Lawyer Michael Minns’ website is: Minnslaw.com.
Editor’s Note: Mr. Minns recently wrote the commentary "The Largest Tax in the History of the World • 2008’s $700-Billion Emergency Proposal".
© 2008 Michael Minns